Incorporation Procedure The incorporation procedure below applies to general partnerships, limited partnerships, share companies and private limited companies (together forms of business ).
• Negotiating and, upon government approval, signing bilateral investment promotion and protection treaties with other countries. The following investment incentives are granted by law: Fiscal incentive: The Investment Regulation provides for extended tax holidays and customs duties exemptions for investment in certain sectors of the economy that are considered vital for future economic growth and investment in specified underdeveloped regions of Ethiopia. Income tax exemption: Eligible investors who invest to establish a new enterprise will be entitled to income tax exemptions, depending on the sector, between one to six years starting from the commencement date of production or provision of service by the investor. In addition to the income tax exemption, any investor who invests to establish a new enterprise in selected regions and locales may be entitled to an income tax deduction of 30% for a further three consecutive years after the expiry of the income tax exemption period. A further two-year income tax exemption is provided for investors exporting at least 60% of their products or services, or supplying the same to an exporter as production or services input. Exemption from customs duties: any investor eligible for exemption of customs duty is entitled to import duty-free capital goods and construction materials necessary for the establishment of a new enterprise or the expansion or upgrading of an existing enterprise. The investor is also allowed to import spare parts, the value of which may not be greater than 15% of the total value of the capital goods, within five years from the date of commissioning of his project. In addition, the amended Investment Regulation states that manufacturing industries that have invested more than USD 200,000 and created permanent employment opportunities for more than 50 Ethiopian nationals will be entitled to duty-free privileges for capital goods at any time. Industrial Park Incentives 3 Investors who manufacture in the industrial parks enjoy added benefits such as exemptions from income tax for up to 8-10 years. Furthermore, the parks provide one-stop government services within the parks premises. The land lease term for factories and residential quarters is 60-80 years at a nominal rate. The parks also provide customs
Stage
Applicability
1 Reserve a unique company name and trade name 2 Ensure authentication of the company documents and the lease agreement at the Documents Authentication and Registration Office ( DARO ) 3 Obtain a tax identification number ( TIN ) 4 Submit documents and obtain a letter from the Trade Bureau at the sub-city level to open a bank account
Any form of business
Any form of business
Any form of business
PLC or share company
5 Open a bank account
Any form of business
6 Register and obtain the commercial registration certificate
Any form of business
7 Create a company seal
Any company
8
Any form of business (it is mandatory for a business with a turnover of greater than 500,000 ETB or for business engaged in some specified areas,
Register with the Ethiopian Revenue and Customs Authority for VAT A newly-established business must register for VAT if its turnover is at least 500,000 Ethiopia Birr ( ETB ), which is equivalent to approximately USD 23,300.Once registered, the VAT certificate is obtained. Obtain a Certificate of Competence The Certificate of Competence is issued by the government agency, which has regulatory power over the particular commercial activity for which a business licence is issued.
regardless of their turnover amount)
9
Any form of business
10 Obtain Business Licence
Any form of business
11 Install a cash registration machine
Every form of business registered for VAT
Investment Promotion and Incentives The EIC administers the investment sector and serves as a nucleus for matters of investment promotion, coordination and enhancement. The EIC’s main functions include: • Promoting the country’s investment opportunities to foreign and domestic investors; • Issuing investment permits, trade registration certificates and business licences; • Registering technology transfer agreements and export-oriented non-equity based foreign enterprise collaboration with domestic investors; and
3 http://www.investethiopia.gov.et
Africa Investment Guide | 27
Made with FlippingBook Online newsletter